Hello peeps
I have solved my .mkv issues and thought i would share
Firmware version 1.02, 1.03 seem to have a nasty bug where in if you have .mkv and file folders mixed in the root my LG BP530 DNLA certified player would just hang for hours and i would have to unplug it.
Today I created another folder in the root and moved all the .mkv files to it and rebuilt the library and wouldn't you know it the BP530 no longer locks up while browsing the DNS-320L NAS. This has also seemed to fix the media refresh hanging at 26% for days. Total time it took to refresh after doing this was about 5 minutes, Only one smoke and half a Beer. LOL
I now have my entire digitized media collection working 1.69 TB I am running 2 WD Red WD20EFRX-68EUZN0 Drives in Raid-1, Gonna spring for a couple on 4TB drives and another of the Diskless DNS-320-L's and digitize the rest of my DVD collection.
Hope this info helps others that were having issues.